Consumer: The Basics

UNIT 3 CONSUMER ENVIRONMENT

Structure
3.1 Objectives
3.2 Introduction
3.3 Meaning of Consumer Environment
3.4 Family Environment
3.4.1 Structural Aspects
3.4.2 Family Life Cycle
3.4.3 Family Roles and Decision Making

3.5 Dimensions of Consumer Environment

3.5.1 Economic Environment
3.5.2 Social Environment
3.5.3 Cultural Environment

3.6 Changes in the Consumer Environment

3.7 Let Us Sum Up
3.8 Key Words
3.9 Some Useful Books and References
3.10 Answers to Check Your Progress Exercises

3.1 OBJECTIVES
After studying this unit, the learner shall able to :

l recognise the influence of the family environment;

l know the importance of family in a purchasing decision;
l explain the economic factors affecting consumer environment;
l identify the social classes which exercise a considerable influence on buyer’s
behaviour;
l know the impact of cultural environment; and
l analyse changes in the consumer environment brought about by economic
reforms and globalisation.

3.2 INTRODUCTION
The right to clean environment should be added to the four consumer rights
enumerated by Kennedy. The right to clean environment is to be assured that the
environment the consumer lives in, is free from pollution. Widespread and large-
scale pollution seems to be a by-product of an economically developed society,
but it is also an area of great concern for many consumers.
All consumers are subject to the influence of several environmental factors and
40 these have an important bearing on their behaviour. The family, as well as economic,
social and cultural forces taken together constitutes the consumer’s environment. Consumer Environment
Thus, the economic activities of a consumer are conditioned by several internal
and external influences.
In a dynamic and complex socio-economic environment, the consumer of today
is exposed to a large variety of new products and services.
Today, consumers are also conscious of their rights and wants to be assured of
right quality of goods being available at the right price. It is in this context that the
concept of ‘Caveat Vendor’ – let the seller beware  is replacing the term
‘Caveat Emptor’ – let the consumer beware.
Besides, market conditions have been changing with technological changes,
innovations and growing intensity of competition. Successful products have a
shorter span of life now than before. The costs of developing new products have
also been increasing enormously each year, while the risk of failure hunts the
dreams of entrepreneurs.
In Environmental and Consumer Protection Foundation v. Delhi
Administration and Others (Supreme Court of India [2012] INSC 584, in
response to a petition filed by an Indian charitable organisation, the Supreme
Court of India directed the governments of all States and Union Territories to
ensure that all schools, whether private or state-run, provide proper toilet facilities,
drinking water, sufficient classrooms and capable teaching staff.

3.3 MEANING OF CONSUMER ENVIRONMENT

According to Stockholm Declaration, Proclamation 3,“We see us growing
evidence of man-made harm in many regions of the earth: dangerous levels
of pollution in water, air, earth and living beings; major and undesirable
disturbances to the ecological balance of the biosphere; destruction and
depletion of irreplaceable resources; and gross deficiencies, harmful to the
physical, mental and social health of man, in the man-made environment,
particularly in the living and working environment.”
A comprehensive approach to consumer environment should recognise that man
is a complex being, and that any explanation of his economic decisions which
does not take note of his psychological make-up, the society in which he lives,
and the cultural background that flavours his orientation towards life, is likely to
result in unsound business decisions by manufacturers and distributors of a very
wide range of goods.
The consumer environment can be broadly classified as external and internal. The
external environment to be discussed in detail in this unit comprises the various
economic, social and cultural forces that are beyond the control of individual
consumers.
Psychological factors
The psychological factors that are internal to the consumer include cognitions,
beliefs and attitudes, motivation, personality, perception, learning and interpersonal
response trails.
Motivation:
Motivation is what will drive consumers to develop a purchasing behaviour. It is
the expression of a need which became pressing enough to lead the consumer to 41
Consumer: The Basics want to satisfy it. It is usually working at a subconscious level and is often difficult
to measure.
Motivation is directly related to the need and is expressed in the same type of
classification as defined in the stages of the consumer buying decision process.
To increase sales and encourage consumers to purchase, brands should try to
create, make conscious or reinforce a need in the consumer’s mind so that he
develops a purchase motivation. He will be much more interested in considering
and buy their products.
They must also, according to research, decide on the type of product they sell
and the consumers they target, pick out the motivation and the need to which their
product respond in order to make them appear as the solution to the consumers’
need.
Perception:
Perception is the process through which an individual selects, organises and
interprets the information he receives in order to do something that makes sense.
The perception of a situation at a given time may decide if and how the person
will act.
Depending to his experiences, beliefs and personal characteristics, an individual
will have a different perception from another.
Each person faces every day tens of thousands of sensory stimuli (visual, auditory,
kinesthetic, olfactory and gustatory). It would be impossible for the brain to
process all consciously. That is why it focuses only on some of them.
The perception mechanism of an individual is organised around three processes:
l Selective Attention
l Selective Distortion
l Selective Retention
Learning:
Learning is through action. When we act, we learn. It implies a change in the
behaviour resulting from the experience. The learning changes the behaviour of an
individual as he acquires information and experience.
For example, if you are sick after drinking milk, you had a negative experience,
you associate the milk with this state of discomfort and you “learn” that you
should not drink milk. Therefore, you don’t buy milk anymore.
Rather, if you had a good experience with the product, you will have much more
desire to buy it again next time.
The learning theories can be used in marketing by brands. As the theory of
operant conditioning which states that you can build a good image and high
demand for a product by associating it with a positive reinforcement (or rather a
bad image with a negative reinforcement).
Beliefs and attitudes:
A belief is a conviction that an individual has on something. Through the experience
he acquires, his learning and his external influences (family, friends, etc.), he will
42 develop beliefs that will influence his buying behaviour.
While an attitude can be defined as a feeling, an assessment of an object or idea Consumer Environment
and the predisposition to act in a certain way toward that object. Attitudes allow
the individual to develop a coherent behaviour against a class of similar objects
or ideas.
Beliefs as well as attitudes are generally well-anchored in the individual’s mind and
are difficult to change. For many people, their beliefs and attitudes are part of
their personality and of who they are.
However, it is important to understand, identify and analyse the positive attitudes
and beliefs but also the negative ones that consumers can have on a brand or
product. To change the brand’s marketing message or adjust its positioning in
order to get consumers to change their brand perception.

FAMILY CULTURAL SOCIOLOGICAL ECONOMIC

STRUCTURE CULTURAL SOCIAL CLASS PRICE

BELIFE AND
LIFE CYCLE  
STRUCTURE

PRODUCT
VALUES
OPINION INCOME
LIFE STYLES
LEADERSHIP SAVING
TECHNOLOGY

INDIVIDUAL
PSYCHOLOGICAL
FACTORS

COGNITIONS
ATTITUDES
MOTIVATIONS

×
CONSUMERS
BUYING
DECISIONS

Fig. 3.1: The Complex Consumer Environment

3.4 FAMILY ENVIRONMENT

Human beings start a life in a family. As he grows up, his needs and wants go on
increasing. There are common needs and wants of every human being which are
fulfilled in a family.
The influence of a family on its members is pervasive. The effect of traditional
attitudes, interests, motivations, etc. is appreciable not only in the formative years,
but is likely to extend throughout the life span of its members. During their early
years, children often acquire consumption habits  including learning brand names
of certain types of products  which become part of their way of life.
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Consumer: The Basics The life-style of a family largely sets its status in society. People’s aspirations,
professional opportunities, general behaviour and expectations are deeply affected
by the traditional living style of their families. With children getting more attention
in a small family, there is a general willingness to meet their reasonable needs and
desires to facilitate their success in life even at the cost of present hardships.
Concern for the future of the next generation appears uppermost in the minds of
the parents.
Though the family, individuals are introduced to society; they learn acceptable
standards of behaviour. Within the family, cultural values are transmitted and
specific roles are assumed in the household. Members of a family interact with are
another, and this may lead to conflict on occasions, particularly when those in
authority constrain the behaviour of dependents. A mother may decide that she
knows best, what type of clothing to buy for her young children and refuse to
purchase garments which she thinks are unsuitable.
Family is becoming more and more complex in its modern setting and in the ever
changing family scenario. In traditional homes, making and management activities,
ethics and values are easily passed as to children by their mothers. In the present
family system, where the mother is occupied outside home for longer hours, she
has very little time to spend with children and pass her knowledge of consumerism
to her children. There is a great need of transmitting knowledge to protect children
from many physical, environmental and economical hazards.

3.4.1 Structural Aspects

Although ‘family’ seems to be intuitive term as it is used to define family composition
and structure, as well as role played by family members.
A family is defined by the Bureau of the Census of the U.S. as ‘two or more
persons related by blood, marriage or adoption and living together’. Family research
attempts to describe and understand how family members interact and influence
each other in terms of household purchases. Kolter describes that there are two
types of families in the buyers’ life  family of orientation and family of procreation.
A family of orientation consists of one’s parents and siblings from where a person
acquires an orientation towards religion politics, economics, and a sense of personal
ambition, self-worth and love.
The family of procreation includes one’s spouse and children who have a more
direct influence on everybody’s buying behaviour.
In India and in few other countries, the joint family system is prevalent where all
the members of the family consisting of uncles, aunts, their children, grand parents
and all others having a share in the property live together. Now, joint families are
fast-vanishing in India. In most western countries, societies, three types of families
dominate; the married couple, the nuclear family and extended family. The married
couple family consisted of only husband and the wife, including the newly married
couples or older couples who have already raised their children. The second type
of family is known as the nuclear family consisted of the husband, wife and one
or more children and third type of family is extended family in which the nuclear
family lives with other relatives such as grandparents, uncles, aunts, cousins and
in-laws. Now-a days a fourth type of family is rising in number due to divorce,
separation and out-of wedlock births, which is known as the single parent family.
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In western societies, marriage generally leads to a new household being established; Consumer Environment
new housing, furniture, kitchen equipments, etc. are required. The impact on
consumer needs is therefore, considerable. If a new home is not immediately set
up and the newly married couple continues to live with the joint family, a different
pattern spending will result. In nuclear households it has been seen that the wife’s
mother or mother-in-law is the person to advice. Her influence is considerable in
the initial stages of setting up the home. As the young housewife acquires experience
and self confidence the influence of the elder as an advisor tends to decline. The
personality characteristics of the housewife affect the rate at which she is able to
become independent in her shopping behaviour. Her motivation influence for
example, the strength of her need for achievement or for dominance is likely to
contribute significantly to her style of house-keeping.

The social and culture environment of the joint family exert consistent informal
pressure to confirm to the norms of the household. It also offers mutual help to
the members. The clustering of families spanning several generations has undoubtedly
had a profound effect on the behaviour of individuals. Strong family links may
discourage the adoption of new life-styles, and patters of personal expenditure
may be inhibited by the cultural traditions and taboos of the family.

3.4.2 Family Life Cycle

Each family passes through a cycle that begins with the marriage of two young
persons, grows with the arrival of children and then again becomes a home of two
persons, when the children many and leave their houses. Thus, the family starts
with too relating young persons, grows normally into a long group of assorted
ages and finally returns to a group of two older persons.

Understanding the concept of family life cycle is a valuable guide and in realising
and meeting the managerial problems of family life for a couple who constitute a
family after marriage. The importance of recognising family life cycle of the family
lies in the opportunity it provides to the family of two young inexperienced couple
to look ahead and to foresee the family needs and wants which may be expected
to arise during each stage. It will also enable the family to predict the related
problems and the flow of resources and funds it can reasonably expect at various
stages. Many of the problems which a family may face at a later stage may be
due to the fact that it was not prepared adequately to meet such situations either
due to lack of knowledge or an account of circumstances beyond their control.
If any provision was made in the earlier stages of its life cycle, it would have
certainly enabled the family to be prepared to face such situations without any
difficulty.

Among the various problems the most families face and the most important of
them is that of finances. However, demands or other resources such as time,
energy, abilities, skills and material goods would also be felt as the family grows
with the arrival of the children.

It is important that the young couple realise the extra demands that are likely to
arise after the arrival of the children. Though, in the beginning, their personal
income and the other resources available may be found to be adequate, an
understanding of the concept of the family life cycle would enable there to reserve
a position of it for meeting the additional demands which are likely to arise in the
future. Thus, it enables a family to plan for free future at a time, when the flow
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Consumer: The Basics of resources may be found to be inadequate as compound to the demands arising
with the arrival of the children in the family.

Family is a dynamic entity. The composition of a family changes over time and
with that the family needs, behaviour of its members and the decision making
process also change. The change in composition in family is known as ‘family life
cycle’ which is basically the progression of stages through which many families
pass. There is, however, another framework called ‘consumer life cycle’ which
explain the stages a consumer passes though in life reflecting the systematic effects
of age, marital status and presence of children. Schhiffman and Kanuk have
proposed the family life cycle model consisting of five stages. In the general
progression of an adult is considered over the period in question. These stages
are as follows:
Stage 1: Bachelorhood – This stage consists of a young adult living apart from
their parents.
Stage 2: Honeymooners – It consists of a young married couple with no children.
Stage 3: Parenthood – This stage consists of a married couple at least with one
child living at home.
Stage 4: Post-parenthood – This stage consists of an older married couple with
no children living at home.
Stage 5 : Dissolution – This consists of only are surviving spouse.
Well and Guber have proposed the following eight stage framework for a consumer
oriented family life cycle.
1) Young Single – Unmarried, under thirty five, characterised by below average
income, high discretionary spending, considerable freedom, people not living
at home, few financial burdens, fashion opinion leaders, recreation oriented
and buy basic kitchen equipments and furniture.
2) Newly Married –Young, married, no children, characterised by good financial
situation, creation of a new household new obligation and activities. High
purchasing rate of consumer durables- furniture/ auto/ refrigerator (may be
highest purchasing rate).
3) Full Nest I – Married, youngest child under 6. Characterised by arrival of
children, parents loss of freedoms, new focus on home, including financial
debts. Low liquid assets, dissatisfied with financial positions and savings.
Interested in new products, influenced by advertisements, buy washing m/c,
T.V., baby food, toys.
4) Full Nest II – Married youngest child 6-12 years characterised by increase
in freedom of parents, improvement in financial situation catering focus on
home. Lower influence of advertisements, buy large size packs/multiple units,
Food, Cleaners, Educational Accessories.
5) Full Nest III – Older Married Couple with Dependent Children,
characterised by increase in freedom of parents, improvement in income, but
presume as society for college; focus moving outside of home, Children may
start getting jobs, Difficult to influence with advertisement. Buy: Furniture,
Magazines, and Appliances.
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6) Empty Nest I – Older Married Couples with No Children Living with Them Consumer Environment

characterised by increase in freedom of parents improvement in finances,

focus shifted to outside of home and extended family, Family head still
working, Peak home owners. Most satisfied with financial position and
savings. Buy: Travel, recreation, self education, gifts. Not interested in new
products.
7) Empty Nest II – Married referred frame work, children have left home.
Characterised by drop in income, possible stress as finances due to medical
concerns, substantial freedom, head of family retired, Keep home and possible
focus as extended family.
8) Solitary Survivor – widowed, refried frame work children have left home,
characterised by lower income possible health and loveliness problems,
substantial freedom and possible focus on extended families.
9) Solitary Survivor, Retired – Drop in income, Buy medical care, Needs
attention, affection and security.
10) Modernised Life Cycled – Includes Divorced and No Children.
Thus, it can be seen that knowledge of life cycle of a family and its changing
patterns helps a family in planning for the future. It enables them to look ahead
and picture their needs and desires. The old phrase ‘saving for a rainy day’ has
real meaning when one understands family life cycle.
The special needs life cycle offer unique opportunities to the marketers by identifying
the target markets for the demand for a particular product. Dynamic socio-
demographic changes in society have resulted in many non-traditional stages that
a family or non-family household might pass though. The stages at which families
find themselves is course of their life cycle ( Bachelors – newly married – young
married couples with children – older married couples with children – older
married couples without children – older single individuals) affect the nature of
goods and services they demand and there are likely to be marked changes in the
volume of expenditure as specific products. Decisions are also likely to be arrived
at in different ways at different stages in family life cycle.

3.4.3 Family Roles and Decision Making

The assignment of roles to specific members of family has an impact on its social
development and an its buying behaviour. Traditionally, the duty of providing funds
for the welfare of the family is customarily assumed by the husband. The wife
tends to be the custodian, with responsibilities particularly related to purchasing
food and household goods. Due to urbanisation, industrialisation, westernisation
and education, there have been rapid changes in the family roles, and they are
now very much different from the traditional era. Traditional roles assigned to
family members have undergone drastic changes as a result of socio-economic
and political developments. There is now greater economic, political, professional
and social freedom of movement. This has undoubtedly changed traditional views
on dual income or working couple families and the dominant role of the husband
as sole income earner has been challenged. Greater participation in an ever-
widening area of buying may be expected and marketers keep their information
in their selling strategies.

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Consumer: The Basics A change in sex role produces changes in families’ purchasing roles. The general
direction of the change in purchasing roles is suggested by the notices of the
merging sex ideas, since the husband has traditionally been the dominant economic
decision-maker.
The image of family life continues to change as family roles affect social change.
Now, freed from traditional drudgeries, today’s families are more specialised than
ever before as they focus upon the development of their members as their central
goal.
Mostly buying decisions are husband-dominated, wife-dominated, joint or
autonomous. The extent and nature of the husband’s or wife’s influence in family
decisions depends on the specific product or service, the particular stage in the
decision-making process and the specific features under consideration. Decision-
making process is known as the crux of any buying process.
In India, in spite of the great cultural diversity, the structure of families shows
uniformity, to a large extent. At the same time, the culture and other values
inculcated in children in India during their upbringing man the Indian families vastly
different from their counterparts in the west.
In the present scenario children play an important role in decision-making as
children extend a substantial influence in the consumption process. The role of
family members as initiator, influencer, decider, buyer and user affects the decision-
making process very much. Decision of a consumer is influenced by following
factors:
Thus, the ability of consumers for decision-making is multi-directional. Apart from
that consumers’ decisions are influenced by traditional culture, religion and society,
of which consumers form a part.
Check Your Progress 1
1) Market management is primarily concerned with __________________.
a) Identification of consumers and their needs
b) Evaluating competitors strategies
c) Keeping pace with technological changes
d) Enabling the business unit to earn profits
2) Give three examples of individual psychological factors.
.................................................................................................................
.................................................................................................................
.................................................................................................................
3) What is a family life cycle?
.................................................................................................................
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 Consumer Environment
3.5 DIMENSIONS OF CONSUMER
ENVIRONMENT
The buying behaviour of consumers is influenced by a number of factors such as
socio-economic environment of consumers, geographical location, cultural
environment, literacy level, occupation, marketers’ efforts, exposure to media, the
way consumers use the products etc. Consumers’ perceptions are highly subjective
and subject to environment influences. Consumers are quite unpredictable, and
the complex nature of consumers makes the study and understanding of consumer
behaviour imperative. Marketing scholars have employed a variety of techniques,
including approaches based on environmental influences, to study consumer
behaviour. After analysing at length the influence of the family as an important
constituent of consumers’ environment, we may now describe the economic,
social and cultural dimensions of that environment.

3.5.1 Economic Environment

Sustainability of production and consumption emerged as a prime global concern
by the turn of the last century, and for good reason. Advances in science and
technology provided mankind the capability to transform his surroundings as well
as the means to provide for human needs. According to the International Monetary
Fund (IMF), “the total amount of goods and services produced in the twentieth
century is estimated to have exceeded the cumulative total output over the preceding
recorded human history”. World Population between 1900 and 2000 increased
from 1.6 to 6.3 billion, while on the other hand, world production increased 19
times. In the last twenty five years, world consumption has been doubled. Although
economic development had yielded enormous benefits to mankind, the negative
impacts were equally staggering. The United Nations Conference on Human
Environment, 1972 expressed serious concern at the deteriorating environment
impacts of economic development.
At the global level, the Stockholm Conference was the first key milestone that
addressed the problem of sustainable development. “We see around us growing
evidence of man-made harm in many regions of the earth: dangerous
levels of pollution in water, air, earth and living beings; major and
undesirable disturbances to the ecological balance of the biosphere;
destruction and depletion of irreplaceable resources; and gross deficiencies,
harmful to the physical, mental and social health of man, in the man-
made environment, particularly in the living and working environment.”
Consumption is the use of utility of goods for the satisfaction of human wants, and
therefore, it is the beginning and end of all economic activities. It is a fact that
consumption is the basis of income, employment and economic welfare. Benham
Frederic has stated that, “in capitalist economy consumer’s sovereignty is
recognised because the entire economy revolves under its direction. In
this economy all the activities of production, exchange and money operate
as per desire of the consumer and thus, under capitalism the consumer is
the King.” 1
Consumer decision is based on a careful allocation of resources among various
alternatives to maximise the utility within the constraints imposed by a financial

1
Frederic Benham, Economics, p.156 49
Consumer: The Basics budget. Consumers’ buying decisions are the outcome of economic influence
which comprises income, price, technology, economy of purchase, dependability,
quality and operational effectiveness of the product. These factors significantly
affect the consumers’ decision-making process. The more important among the
factors are the following:
a) Income
Income is the primary economic influence deterring / regulating the consumption
expenditure of individuals. Personal disposable income is the amount of money
people are left with after paying the taxes. Although money income per capita has
grown steadily in most economies, real income has not increased substantially due
to fall in the purchasing power of money.
Consumers on the basis of income are grouped as upper class, middle class,
working class and the low income groups. In India, there exist consideration
disparities in the income and wealth distribution. Increases in income influence the
buying habits of consumers. To quote Engle’s law, “As family income rises, the
percentage spent on food declines and the percentage on other categories (clothing,
recreation, health, education) and savings increases.”
b) Savings and Debt
Consumers’ expenditure is also affected by savings and debt patterns. In India,
people hold savings in the form of bank Savings Accounts, bonds, shares, real
estate, jewellery and other assets. These savings form a major source of financing
purchases.
Consumers can increase their purchasing power also through borrowing. The
availability of consumer credit due to the development of banking and financial
institutions has been a major contributor to the growth of the Indian market. It has
enabled people to buy more than their current income or salaries allow, thus
creating more jobs and still more income and more demand.
c) Product Consideration
A product can be defined as anything that can be offered to a group of consumers
for attention, acquisition, use or consumption that might satisfy a need or want.
It includes physical objects, services, persons, places, organisations and ideas.
Products are packaged and labeled and various customer services may be offered
along with the product. All these criteria exert a considerable collective influence
on buyers.
Brand names, for example, tell the buyer something about product quality. Brand
names also increase the shopper’s efficiency and help to call consumers’ attention
to new products that might benefit them.
d) Price Considerations
Inspite of the increased role of non-price factors in influencing consumer behaviour,
price remains an important factor. The consumer decides whether the price is right
for the product a company is selling. The consumer, before purchasing, weighs the
price against the perceived values of using the product. Consumers differ in the
values they assign to different product features and marketers often vary their
pricing strategies for different consumer segments.
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It is assumed that most of the consumers want to maximise satisfaction while Consumer Environment
many actually seek only satisfactory purchase solutions rather than optimal ones.
It is also assumed by consumers to make careful measurements of the utility to
be gained from all possible alternatives. A rational decision is presumed to be
made, that is, the consumer is presumed to have complete information about
prices, markets and products. But this condition is unavailable, or too costly to
obtain, or too technical to understand. Then, the consumer who is assumed to be
rational is actually influenced a great deal by emotions. Price and durability often
become secondary to beauty and prestige. Lastly, the basic assumption in
economics is homogeneity homogeneous products and homogeneous consumer
preference. Marketing, on the other hand, is based on the concept of heterogeneity
both demand and supply are heterogeneous. Sales at concessional prices, price
reductions, discount offers and free gifts are commonly used as sales promotion
tools by marketers. Consumers sometimes defer purchases to avail of price
reductions during an off-season sale.

Advertisements cast an important influence on consumers. Advertising has emerged

as a potent promotional tool in enhancing sales of existing products and introducing
new products. Companies use advertising to increase the awareness of consumers
through the communication of persuasive information about their products, services
or organisations.

Since advertisements are basically meant to promote a product or a service, one

does see some exaggeration in the way they extol the virtues of the [Link]
advertising is aimed at creating a deep psychological effect. The aim of advertisers
is to create demand, impression, or desire for their products, and to expand sales.
All this is accomplished by creating interesting and attractive advertisements,
which can easily be understood by all alike. This creates a favourable image of
the product. Advertisements also benefit consumers in certain ways. For example,
consumers are exposed to the different brands of the products available. They are
then able to compare the options, and select those that best meet their needs.

e) Influence of Technology

The most phenomenal feature shaping people’s consumption is perhaps technology,

which has released wonders such as penicillin, open heart surgeries, birth control
pills etc. It has released forces of change in production processes and nature of
products. It has dramatically revolutionalised the world of media entertainment
and communication.

Many of today’s common products were not available a hundred years ago. The
consumer is therefore, constantly subjected to the advent of new products, which
claim features of greater efficiency, comfort, speed and reliability. The consumer
now has not only a wider range of products to choose from, he also has an
enhanced variety and brands of products available for purchase.

Check Your Progress 2

1) Personal disposable income refers to:

a) Income earned on monthly basis

b) Income minus taxes

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Consumer: The Basics c) Income minus savings and taxes

d) Income minus borrowings

2) In purchasing a product, consumer consider:
a) Product quality
b) After-sale service
c) Branding and packaging
d) All of the above
3) Technological innovations have brought about
a) Better after-sale service
b) Wide range of products
c) Production of high quality goods
d) Lowered prices

3.5.2 Social Environment

Human societies exhibit social stratification. It may take the form of a caste
system, as found in India, where the members of different castes are reared for
certain roles and cannot change their caste membership. It may be in the form of
social classes whereby people in a society are ranked by other members of a
society into higher and lower social positions, which produces a hierarchy of
respect or prestige.
Social class may be defined as a group consisting of a number of people who
have approximately equal positions in a society. Social classes are relatively
homogeneous and enduring divisions in the society.
A social class comprises a large group of people who possess something common
in values, interests, lifestyles and behaviour. Social classes are formed when people
feel empathy with others sharing similar values and economic circumstances. The
variables like status, wealth and power are commonly used to stratify the society.
Social classes are by no means entirely homogenous and each class blends into
its adjacent classes. Nevertheless, people in each class share many of the same
goals and hold similar views about the appropriate means of reaching them.
Marketing managers therefore study in detail the characteristics of social classes
before designing marketing strategies for them.
A member of a particular class would normally select items that conform to the
nation of good taste and fitness held by that class. Families of the upper middle
class, for instance, including fairly successful professional men and executive would
prefer to buy particular kinds of houses, furniture, clothing, recreation and luxuries
that coincide with what their class thinks is the proper way to live. Indicators of
changes in social stratification are more equal educational opportunity, greater
social mobility, the impact of modern communication, mass media, etc., and they
cause similar blurring of rigid social divisions and attitudes. In addition to social
classes, there are also social and occupational groups which have a bearing on
consumer behaviour. Social groups differ from social classes in the sense that
groups are narrower and more restricted in membership. Thus, a class may
compromise of several groups.
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It is said that man is a social being. He lives in the society, and thus, his behaviour Consumer Environment
is influenced by the society in which he lives. He may a member of various
organisations and societies. He may be attached to his professional organisations
or associations and may be a member of political party also. Most individuals
interact with other people on a daily basis, and an individual’s social behaviour
and social relationships are often motivated by expectations of satisfying specific
needs. Social interactions and group dynamics influence consumer behaviour directly
or indirectly. The interaction between him and the society or group to which he
belongs is found. This interaction leaves certain influences on him. These influences
affect his life, which in term affects his buying behaviour. The groups that affect
a consumer’s behaviour are discussed below.
i) Close Group/Reference Group
In this group, members of family, relatives, friends, colleagues etc. are included.
This group influences the life style and living standards of persons or individuals.
This group also influences consumers’ buying behaviour. Family is the most
important group, which exercises significant influence on its members. Peer
groups influence their individual members effectively. Peer groups are those
groups of individuals that have a common social background and are of
similar age group.
In such groups normally the group leader is followed by the members. His
judgement in the matter of buying the products is mostly adhered to by the
members. The views of the leader and his lifestyle influence the buying
practices of the members of the group. The leader first tries the new product
and then propagates it. The sellers or manufactures, therefore, try to influence
the group leader through various modes of communication. Reference groups
influence consumer behaviour in three ways:
l Expose the individual to new behaviour and lifestyle,
l Influences person’s attitude and self-concept,
l Create pressures for conformity that may affect the person’s actual
product/ brand choices.
ii) Membership Group
This group plays a significant role in the transmission of beliefs. Among
membership groups, the family considered the most powerful influential group
because of its unique role in early childhood socialisation. In other words,
membership groups are those to which the consumer belongs and which
have a direct influence on him. In some groups membership is automatic by
virtue of the consumer’s age, sex, education and marital status. Before acting,
a consumer might consider whether purchase or use of a product would be
consistent with his role as a member of one of such groups.
Membership Group are groups having direct influence on a person. Primary:
Family/Friends/Neighbours/Co-workers with whom that person interacts
informally on everyday basis. Secondary: Formal/ Less continuous interaction
such as professional/relational/trade unions/ religious groups.
iii) Inspirational Groups
Inspirational groups are those to which the consumer at present does not
belong. Many of these groups are likely to be anticipatory, to which a person
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Consumer: The Basics would like to belong. They are referred to as inspirational groups. This
pattern of behaviour is evident among upwardly mobile consumers who
aspire to join higher status clubs and social groups. Inspirational groups are
groups of which an individual makes maximum effort to acquire membership.
Sports heroes and movie stars are examples of inspirational groups.
iv) Primary Groups and Secondary Groups
Groups such as family, friends, neighbours and co-workers with which a
consumer interacts continually are called primary groups. Groups such as
religious, professional and trade union groups are referred to as secondary
groups. While primary groups tend to be informal, secondary groups tend to
be more formal and require less continuous interaction.
v) Dissociative Groups
Dissociative groups are those which an individual avoids relating to. Such
groups equally contribute to shape the behaviour of consumers, because
individuals avoid the actions or consumption behaviour that characterise the
dissociative or avoidance groups.
vi) Opinion Leaders
Persons in informal product-related communication who offer advice/
information about the product/ product category.
 Marketers may try to reach out to opinion leaders by:
l Identifying demographic/ psychological characteristics associated
with opinion leaders,
l Identifying media read by opinion leaders,
l Directing messages at opinion leader.
 Group influence is strong for products that are visible to others whom
buyers respect
 Influence varies with:
l Cohesiveness of the group,
l Person’s esteem for group,
l Group’s communication effectiveness.
vii) Face-to-face Groups
Face-to-face groups are groups of people small enough for the individual to
communicate with. Such groups have a direct influence on an individual’s
ideas, tastes, values and behaviour.
An individual is influenced by a reference group in the following manner:
a) These groups expose the persons to possible new behaviours and life
styles.
b) They also influence the individual’s attitudes and self-concept because
the person normally desires to fit in.
c) They create pressure for conformity that may affect the choice of actual
product and brand name.

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 Consumer Environment
Check Your Progress 3
1) Which are the group that affects consumers’behaviour.
................................................................................................................
................................................................................................................
................................................................................................................

3.5.3 Cultural Environment

To understand the behaviour of people as consumers some knowledge of the
influence of cultural values and norms is also necessary. Cultural factors also affect
consumers’ behaviour. In individual life culture and religion exercise an influence
on habits, ways of living and various items of consumption including dress etc.
The culture and religion, which a person follows, set a definite pattern of his social
conduct. This conduct influences his behaviour in buying various products. Their
influence may vary from individual to individual.
Society develops distinctive cultures which reflect the many facets of human
behaviour that have been learned and accepted by groups of people so that these
form part of their traditional way of life, their lifestyle.
Culture plays an important role in influencing consumer perception, which in turn
influences preferences and purchases. A marketing mix can be effective only as
long as it is relevant to a given cultural. A study by A.L. Kroebar and Clyde
Kluckohn, “Culture: A critical Review of Concepts and Definitions’’, Random
House, found that there are at least 164 Definitions of ‘Culture’. A basic definition
of culture is “a set of traditional beliefs and values that are transmitted and shared
in a given society.” Culture is also the total way of life and thinking patterns that
are passed from generation to generation. In other words, culture means many
things to many people because the concept encompasses norms, values, customs,
art and more.
Because culture is shared and passed along from generation to generation, it is
relatively stable and somewhat permanent. Old habits are hard to break, and
people tend to maintain their own heritage in spite of a continuously changing
world. Because of the enduring aspect of culture, it is easier for marketers to
make products consistent with the culture in which the products are marketed
rather than to try changing the culture to fit the products.
Individuals may react quite differently to the same situation according to their
cultural background and their general experience. Bank Managers, for example,
are expected by the society in which they live to be reliable, honest and serious-
minded individuals. Traders, on the other hand, are suspected to be greedy and
bent on making profit by exploiting customers.
Culture is passed along from generation to generation, but one should not assume
that culture is static and immune to change. Culture is constantly changing and it
adepts itself to new situations and new sources of knowledge. The dynamic
aspect of culture can make some products obsolete and can usher in new buying
habits.
Culture Values
Culture and values are important to the organised and integrated nature of
society. In addition, cultural values in society find expression in the products and 55
Consumer: The Basics services that are demanded, the acceptance of new products, for example, may
be dependent on the cultural implications involved in changing the prevailing pattern
of consumption.
Values are culturally determined, meaning that they are learned from social
interaction, largely from our families and friends in settings such as schools and
temples. Values strongly influence consumer behaviour. Even though specific
situations may dictate slightly different actions, overall there is much similarity in
consumer behaviour within a given culture, such as in tastes, methods of shopping,
and so forth.
The status of women in a particular culture may affect the consumption of certain
types of products, such as domestic labour saving equipments (Washing Machines,
Microwaves and Ovens).
Sub-culture
In a big country like India, several sub-cultures can be identified on the basis of
religion, rural-urban origin and geographical distribution. Further, as population
increases, the broad ideals of culture no longer satisfy certain minority groups, and
sub-cultures emerge.
Because of differing cultures, worldwide consumer homogeneity does not exist.
Differences in consumer groups are everywhere. There are white, black, Jewish,
catholic, farmers, truck drivers, young, old eastern consumers, among other
numerous groups.
A sub-culture is a distinct and identifiable cultural group that has values in common
with the overall society but also has certain characteristics that are unique to itself.
Subcultures are thus groups of people within a larger society. For example,
Indonesia has more than three hundred ethnic groups, with lifestyles and cultures
that seem thousands of years apart.
There are sub-cultures of students, professionals, sportsmen, prison inmates,
musicians, marketers and other groups. Moreover, individuals may be members
of more than one sub-culture at the same time; thus, it is imperative that marketers
understand the most relevant sub-cultures for their products and services.
Sub-cultures are also segmented on the basis of elderly consumers and on the
basis of sex. Today, products are sold worldwide, as there is worldwide demand.
It creates a climate in which cross-cultural consumer analysis becomes critically
important and a must to determine whether and how to enter a foreign market.
The problems involved in cross-cultural analysis include differences in language,
consumption, patterns, needs, product usage, economic and social conditions,
marketing conditions and market research opportunities.
Cultural changes are the outcome of social, political and economic factors, changes
in technology, changes in the literacy rates and so forth.
Cultural trends are used as a basis for market segmentation, product development,
advertising and other aspects of marketing strategy.

3.6 CHANGES IN THE CONSUMER

ENVIRONMENT
The role of the consumer has changed from seeking the most satisfaction from
goods and services to reconciling consumption with active citizenship, which links
56
consumption to modern social issues such as environmental protection, sound Consumer Environment
business ethics, and fair working conditions.
Understanding consumersthe way they buy products, the way they relate to
questions of environmental importance, and the way they participate in public
policy formulation processes  is of vital importance to modern society.
In recent years behaviour of the consumer has changed phenomenally. A few
decades ago the consumer was a silent person who uncomplainingly purchased
the goods from any place. But this is not so today. Now the consumer is the
choice-empowered consumer who decides the fate of the product with the rising
of his earnings. Thus, the manufactures are continuously engaged to understand
the complex consumer behaviour better and respond by offering goods and services
as desired by them. However, in cases of scarcity, the buyer is compelled to buy
whatever things are available in the market.
Consumer environment all over the world and particularly in India is undergoing
a sea change. Globalisation has placed the consumer in the wider international
market. Liberalisation, privatisation and economic reforms in India have brought
in multinational companies and have also ushered in technical collaboration and
joint ventures.
These changes have resulted in a host of new products flooding the Indian market.
Consumers now have a wider range of products to choose from; and marketers
are constantly competing for higher sales through advertising and innovative sales
promotion tools.
Quality consciousness and cost consciousness are also growing. Companies are
constantly struggling to improve quality, reduce costs and provide better after-sale
services to their clients.
Consumer awareness has considerably increased and consumer forums are
providing protection to consumers against unfair practices of the producers and
suppliers of goods and services. The consumer environment today is not static,
but highly volatile and fast changing.

3.7 LET US SUM UP

Consumer environment comprises the family and the cultural, sociological and
economic factors. The family environment is an important factor influencing the
behaviour of individuals. It is through the family that individuals are introduced to
society and imbibe standards of consumption habits.
The economic forces of income, savings, credit availability, product considerations,
price considerations and technology exert substantial pressure on the reasoning
capacity of buyers. The social classes and reference groups can also be potent
sources of influence. The cultural values of a society also play an important role
in this regard. The consumer today is a more rational, aware and discerning
individual than he was in the past.

3.8 KEY WORDS

Entrepreneur : A person willing to take up a new business with risks.
Strategy : Course of action designed to achieve success in the
face of difficulties.
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Consumer: The Basics Role Model : A person who exerts a considerable influence on the
lifestyle and behaviour of another person.
Marketing Mix : A system comprising the sub-systems of price, product,
promotion and distribution.
Norms : Standards patterns or types.

3.9 SOME USEFUL BOOKS AND REFERENCES

1) Subha, Mehta C (1973), Indian Consumers : Studies and Cases for
Marketing Decisions, Tata Mcgra Book Bombay.
2) Kotler, Philip, (1987), Principles of Marketing, Prentice Hall of India,
New Delhi.
3) Mc Gown, K.L., Marketing Research- Text and Cases, Winthrop Publishing
House, Cambridge, Masachusetts
4) Sehaf, MA., (1989) Marketing: Principles and Practice, Anmol
Publications, New Delhi.
5) Sethi Mohini and Premavathy Seetharaman (1994), Consumerism: A Growing
Concept, Phoenix Publishing House, New Delhi.
6) Baset Abdel I M Hasouneh (2003), Consumer Behaviour, Sublime
Publications Jaipur, India.
7) Premavathy Seetharaman and Mohini Sethi (2002), Consumerism: Strategies
and Tactics, CBS Publishers and Distributors, New Delhi.
8) Bhargava Bela, (2005), Family Resource Management and Interior
Decoration, University Book House Pvt. Ltd, Jaipur.

3.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Option (a)
2) Cognitions, Attitudes and Motivation
3) A family’s life cycle comprises the following stages: Bachelors – newly married
– young married couples with children – older married couples with children
– older married couples without children – older single people.) Expenditure
on specific products varies considerably during stages of the life cycle.
Check Your Progress 2
1) B 2) D 3)B
Check Your Progress 3
1) Please refer Sub-section 3.5.2

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